Originally Posted by chasesfish
I'm debating whether or not to reduce my wife's Simple contributions. We currently put $12,000/year in, but only need to put $5.000 in to get the full match. We would take the deter-tax difference and invest them in our taxable account. Federal + State marginal tax rate is 34% and we will be over the Roth income limits next year.
The simple's investments stink, it's a 5% load and 2% expense ratios. I roll the balance out every 10k.
I keep running scenarios and I already have a 4 to 1 ratio of tax deferred to taxable accounts. Is just tough to retire at 40-42 if all the money is stuck in investments I can't tough until 59.
I'm also stuck in a similar "dilemma": I'm fortunate enough to have too high total taxable income to contribute to a ROTH IRA, but my tax bracket is high enough that I want to reduce my taxable income. However, my employer's 401k has fairly 'average' selections (average, that is, for a 401k, which means really crappy compared to Vanguard).
Do I pay higher taxes now by adding more to the taxable stash, or hold my nose and max my 401k?
I've opted for the latter, with the plan being that I probably wont' be working for them in 5-10 years (either because of ER or switching employers). At that time, I can roll over into a rollover IRA at Vanguard.
As far as not having enough taxable funds, you would need to do a 71t if you keep socking it away in your tax-deferred, if your taxable fund balance isn't high enough to sustain you until 60.
Since it sounds like you can roll out your contributions, I'd simply put your SIMPLE contributions into their MM fund. It avoids the 5% load, and is like a guaranteed 5% 'return'. SO you can consider it part of your bond allocation.